Penny Stock Market Investing Forums & Trading Tips

Dec. 24, 2012 5:03 AM ET

Stock market forums are like a double edged sword and most investors enjoy a love-hate relationship with them. You can't do without the stock market forums because on occasion they provide valuable clues and tips on some event that is about to happen and one that is likely to have some bearing on a company you have invested in.

Members of Stock market forums also very often ask questions that might have escaped your mind. Often questions raised by members of a stock market forum result in investors seeing a certain penny stock in new light i.e. either as junk or worthy of investment.

The hate factor comes from the fact that stock market forum is the primary tool in the pump-and-dump scam. Fake news is spread via the stock market forums and many an unsuspecting investor ends up investing in stocks that are absolutely worthless.

The stock market forums is therefore to be used like you would a sharp knife; with caution. A stock market forum is also a place you can develop deep friendship with seasoned investors and investors who might be strategically placed e.g. investment reporters and people working for investment companies. The strength of the relationships you develop at an online stock market forum can result in deep insights into the economy as well the general direction of the markets and certain penny stocks in particular.

We ourselves, keep tabs of several stock market forums for the simple reason that if there is a pump-and-dump operation, the clues will be available at the online stock market forum and we can put out a 'stay clear' warning for that particular penny stocks. Several investors and readers had also written to us requesting that we mention the names of the pump-and-dump operators so these can easily be identified at the stock market forum. Unfortunately, such operators seldom use their real name or same user id twice. Each time they begin an operation to dupe gullible investors, they use a new identity.

No matter how much or how many times we warn the public, there will also be victims. It is remarkable how many people feel that stock market investing can be done with no prior training. The lure of making it big at the stock exchange and the air of mystery that surrounds it often results in people plunging into stock trades with little or no thought. Such people primarily rely on online stock market forums for their information.

We've said it before and would like to mention it again; stock trading is not rocket science, it takes effort to understand the technicalities and intricacies involved. The online stock market forum is not the place to learn it.

To sum it up, we definitely urge you to be a member of not one but several online stock market forums. Use them like you would use different types of knives in your kitchen - with a great deal of caution. Once you come across a likely piece of news, try and verify it through your own research. Above all, use plenty of common sense.